- 22 -
disputed tax deficiency with you short of going to
court. * * *
The petition in this case was filed on May 31, 1996. In
their petition, petitioners allege that they were actively
engaged in the trade or business of farming because they:
have a contract with the Cascade County ASCS Committee
representing the United States Department of
Agriculture for the CRP program which requires that
they actively participate in the farming operation.
They have, in fact, fulfilled the terms of their
agreement and have, pursuant to that end, done
considerable farming activity each year in order to
fulfill their obligations under the CRP contract. In
addition, they have actively managed the balance of the
80-acre tract, i.e., they have taken care of the
animals which the agricultural land sustains.
In his answer, filed on July 26, 1996, respondent denies
petitioners’ allegation that they were actively engaged in the
trade or business of farming during the years in issue.
On June 14 and July 23, 1996, Mr. Towe made written requests
for a conference with Helena District Counsel for the purpose of
settling petitioners’ case.
In a letter dated October 16, 1996, to Mr. Towe, respondent
conceded the deficiencies against petitioners. Respondent
explained the concession as follows:
On September 25, 1996, the Tax Court decided the
case of Ray v. Commissioner, [T.C. Memo. 1996-436] * *
* which dealt with CRP payments and whether they are
received in the taxpayer’s trade or business. The
facts are very similar to your clients’ case. The only
difference, however, is that in Ray, the taxpayer was a
farmer at the time he acquired the land. In * * *
[your] case, your clients were not farmers when the CRP
land was purchased. Prior to the determination of the
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011